John F. Shirey is the city manager of Sacramento.

Viewpoints: Kings gave bad data on arena

Published: Sunday, Apr. 22, 2012 - 12:00 am | Page 5E
Last Modified: Sunday, Apr. 22, 2012 - 9:36 am

The unanticipated events that unfolded this month at the NBA Board of Governors meeting in New York were, to say the least, very disappointing to the city of Sacramento.

After all the good will and effort invested by the NBA, AEG, ICON-Taylor, the city of Sacramento, its citizens, businesses and other contributors, it was disheartening to watch on national television the demolition of the project's framework with a wrecking ball of misinformation and undeserved aspersions on our city and all involved.

Understandably, emotions are running high on all sides. But let's set aside the emotions and the heated rhetoric for a moment and simply review the facts. As the saying goes, we're all entitled to our opinions. But we are not entitled to make up our own facts.

Much of the information in question in the past week has come from economic consultant Christopher Thornberg, who was recently hired by the owners of the Kings and who wrote the Viewpoints article "Decision to kill the plan will benefit city in the long run" published Tuesday in The Bee. Unfortunately, at no time during his few weeks' assignment did Thornberg contact me, other city staff, the mayor or any of the highly experienced and informed sports consultants or economists employed by the city.

As a result, his analysis was replete with incorrect or incomplete information. Let me set the record straight.

• Attendance and revenue projections: The consultant incorrectly claims that the city assumed "more than twice" the current attendance at Power Balance Pavilion in the new arena when considering the amount of funds that would be returned to the city.

This is blatantly false. The city assumed 152 events per year with total ticket sales of 1.41 million per year, including basketball. That attendance is roughly equal to the number of attendees at Power Balance Pavilion over the most recent years. Ironically, in the Orlando negotiations, the Kings argued that the city's attendance assumptions for non-basketball events were too low.

As for basketball, the city assumed 44 games per year, including preseason games, at an average of 15,200 attendees per game. That is well below the Kings' two-decade season sellout average of 17,300. It is reasonably above the current 14,200 average attendance but certainly not "more than twice" the current attendance.

When one considers that recent attendance at Power Balance is without a state-of-the-art facility, a playoff-caliber team, events like the NCAA basketball tournament and many other events that a global entertainment operator such as AEG will bring to the Sacramento region, the city's assumptions were very conservative.

• Project budget contingencies and cost overruns: The project budget includes a $32 million contingency. In addition, Turner Construction was to provide a comprehensive cost overrun guarantee on the project construction costs.

• Infrastructure and redevelopment: More than $200 million of core infrastructure is already funded, under construction or soon to be under construction in the railyard. Those projects do not include redevelopment funding, nor does the $391 million arena budget.

• City budget: The rushed two-week review by the consultant clearly led to a basic misunderstanding of the city's fiscal condition. He overstated the city's projected budget deficit by 174 percent and failed to take into account any of the economic benefits and thousands of jobs being saved and created by the arena and railyard projects.

The consultant's concern about the city or its taxpayers comes off as disingenuous, considering that the Kings owners refuse to provide the city adequate collateral to back the refinancing of their loan; refuse to share in predevelopment expenses; refuse to pay for police and other services provided by the city on game nights; and refuse to pay applicable taxes owed to the city and its citizens.

• California law limitations: The consultant stated that the mayor would be term-limited out of office and thus not accountable for the project. That is incorrect. California cities are not subject to the state term limits, and the city charter has no term limits. He also stated that the arena would force higher taxes upon city residents. Again that is false. In California, cities cannot raise taxes for such projects without two-thirds voter approval in a general election.

The bottom line is that the term sheet agreed to by all parties is fiscally sound and fair. Most important, it adheres to our core principle of protecting Sacramento taxpayers.

Understandably, as with any deal of this magnitude, there will be bumps in the road and honest disagreements. But resolving those differences and bringing the project to fruition requires a steadfast commitment to remain transparent, collaborative and, most important, to an honest presentation of the facts.

Building a state-of-the art sports and entertainment complex will support jobs, economic growth and revitalize our downtown core, while giving this region's residents access to world-class entertainment.

The city of Sacramento remains committed to do our part to turn this vision into a reality.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by John F. Shirey



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